Energy efficiency and carbon: the scope for
2.31. Figure 3 shows changes in United Kingdom energy demand
by sector from 1970-2003 (included in the graph as the last year
for which final data are available), derived from the Digest of
UK Energy Statistics (DUKES), and combines these figures with
the DTI's projections for future energy demand. These projections
take account of policy measures already in place, including, for
instance, EU Emissions Trading. However, they become, as the DTI
acknowledge, increasingly uncertain as one moves towards 2020.
2.32. The historical data illustrate the fundamental change
of the last 35 years: a huge decline in industrial energy use
(from 62.3 Mtoe in 1970 to 35.1 Mtoe in 2003), counterbalanced
by an equally dramatic rise in the use of energy for transport
(from 28.2 Mtoe in 1970 to 56 Mtoe in 2003). In contrast, energy
consumed in services (a catch-all, including commercial and public
sectors and agriculture) has remained flat, while energy consumed
in the residential sector has crept slowly, but consistently upwards
(from 36.9 Mtoe in 1970 to 47.9 Mtoe in 2003).
Source: Energy Sector Indicators (1970-2003),
DTI Emissions Projection (2005-2020). An estimate of net energy
consumption by the iron and steel industries has been added to
the DTI's projections.
2.33. The projections reveal not only where the
Government see scope for future savings by means of energy efficiency,
but the extent to which such expectations mark a departure from
or a continuation of existing trends. They show, for instance,
that while domestic energy consumption has, allowing for variations
in individual years, shown a consistent upward trend for 35 years,
the Government, despite their major programme of house-building,
which is expected to result in almost two million new houses being
built by 2015, expect the trend to be partially reversed before
energy consumption stabilises at a slightly lower level than in
2.34. On the other hand, industrial energy consumption
experienced a long decline, before levelling off in the late 1990s.
The Government now expect it to remain at a similar level before
increasing somewhat after 2010again reversing a 35-year
trend. Yet the Action Plan envisages that a further 3.8 MtC "saving"
can be delivered by energy intensive industries by 2010illustrating
just how hypothetical many of the projected "savings"
in fact are.
2.35. Finally, the graph shows that consumption
of energy for transportwhich, as we have already noted,
falls outside the scope of this reportis expected to carry
on rising inexorably, to such an extent that total energy consumption
in 2020 is projected to be around 13 percent above 2003 levels.
In the absence of serious action to tackle the growth in both
road and air travel, there must be a risk that energy efficiency
gains in other sectors will be wasted.
2.36. The graph thus provides a snapshot of the
scale of the challengemore detail on the targets and policies
affecting particular sectors is given in the relevant chapters
below. However, it is when one tries to translate the data on
energy use into carbon, which we have already proposed as the
principal objective for energy efficiency, that the problems really
2.37. The fundamental difficulty is that while
changes in energy efficiency affect the consumption of delivered
energy, Government data on greenhouse gas emissions are derived
from the UK Greenhouse Gas Inventory, the annual report
prepared under the United Nations Framework Convention on Climate
Change. Within the inventory, which follows IPCC guidelines, emissions
are assigned to designated source categories, with the result
that some 85 percent of emissions (including, for example, those
derived from the combustion of fuel for transport, or domestic
heating, as well as those from electricity generation) are lumped
together under the general heading of "energy". Other
sources of emissions, such as those from landfill sites, are unrelated
to energy consumption at all. As a result there is no direct read-across
from the data on greenhouse gas emissions to energy efficiency
and end use.
2.38. Figure 4, which presents in bar chart form
the data contained in Table 3 of the Climate Change Programme
Review, illustrates the problem. In an attempt to show the sources
of emissions more usefully than in the Inventory, the Government
have broken "energy" down into smaller categories, for
instance treating combustion of fuel (petrol, natural gas, and
so on) for transport or residential uses as distinct "sources"
of greenhouse gas emissions, and creating a new category of "energy
supply", which is presumably largely made up of electricity
generation. However, the methodology underlying the Government's
approach is frustratingly obscure, and leads to serious anomalies.
For instance, while the combustion of gas for domestic central
heating is treated as a distinct "source" of greenhouse
gas emissions, domestic electrical heating appears to fall under
the heading "energy supply". As a result of these anomalies,
Figure 4 has limited value for our present purposes.
Greenhouse gas emissions by source, 1990
Source: Climate Change Programme Review.
2.39. Figure 5 illustrates in similar form the
data contained in Table 4 of the Climate Change Programme Review.
In this the Government have assigned emissions, including those
deriving from energy supply, to end users, and the result should
therefore in principle be more informative. Unfortunately, it
is impossible to read across from these data to the raw figures
contained in DUKES. The categories overlap in ways that are not
explainedfor instance, whereas DUKES draws together industrial
energy use under a single heading, in Figure 5 industrial emissions
appear to be split up, in ways that are not explained, between
"business", "industrial processes", and possibly
other categories. Furthermore, the presentation of non-energy
related sources of emissions, such as landfill sites or particular
processes such as the de-carbonation of limestone in cement manufacture,
as "end users", is intrinsically artificial and confusing.
Thus Figure 5 too is of limited value in assessing the impact
of changes in consumption of delivered energy upon carbon emissions.
Greenhouse gas emissions by end-user,
1990 - 2020
Source: Climate Change Programme Review.
2.40. In an attempt to pin down the relationship
between energy efficiency and carbon rather more closely, we have
commissioned research from Dr Phil Sinclair, of the University
of Surrey, into household energy consumption and related carbon
emissions. Dr Sinclair's
methodology is summarised in Box 1. He has used figures for
energy consumption that are publicly available in DUKES, and has
converted them from thousand tonnes of oil equivalent (ktoe) into
a simple measure of gross energy, expressed in primary energy
unit of joules. His
analysis shows that from 1990 to 2002 total United Kingdom household
consumption of delivered energy rose by some 17 percent. This
total includes fuels used for heating as well as electricity.
2.41. The second part of Dr Sinclair's work is
an analysis of the carbon intensity of the fuel mix, taking a
"life cycle" approachin other words, including
such factors as system losses, losses in fuel extraction, conversion
efficiencies, and so on. Multiplied by the figure for total energy
consumption, this produces an overall figure for carbon emissions
resulting from household energy use, which, by Dr Sinclair's calculation,
have fallen over the same period by just over half of one percent.
Significantly, while the results of Dr Sinclair's analysis correspond
to within a few percentage points with the Government figures,
so as to indicate broad consistency between the two independent
calculations, there are enough differences to demonstrate the
difficulty of establishing a clear link between the Government's
existing data on emissions and those on delivered energy consumption.
Calculating the effect of energy use upon
- Energy efficiency primarily affects the consumption
of delivered energy, for which annual data are found in the Digest
of United Kingdom Energy Statistics (DUKES).
- Data from DUKES for total energy consumption
in a given year are converted into a neutral measure of gross
- DUKES also provides data on the contribution
of different primary fuels (such as coal, gas or oil) and of electricity
to the total.
- The carbon intensity of the total fuel mix in
that year is then calculated, on the basis of a "life cycle"
approachtaking into account fuel extraction, conversion
efficiencies of electricity generators, and so on.
- Consumption of delivered energy is multiplied
by the figure for carbon intensity to produce a figure for the
greenhouse gas emissions deriving from the consumption of delivered
energy in that year.
- Greenhouse gas emissions as a result of non-energy
based activities (e.g. certain industrial process, the decay of
waste in landfill sites, or changes in land use) are excluded.
As a result this methodology provides an accurate picture of the
impact of changes in consumption of delivered energy upon emissions.
2.42. Dr Sinclair's calculations cover only the
domestic sector, and may require refinement. However, as an attempt
to establish a methodology for converting energy use into the
common currency of carbon, we believe that it introduces greater
clarity into the discussion of energy efficiency, by setting out
an explicit methodology for translating data on energy consumption
into carbon emissions. Only if the Government adopt a similar
methodology will it be possible to demonstrate that their policies
on energy efficiency are grounded in reality and are delivering
tangible results. We believe this to be an essential pre-requisite
for public information programmes to promote energy efficiency.
2.43. In order to be able to measure the contribution
of energy efficiency to emissions targets, the Government should
develop and publicise an explicit and transparent methodology
for calculating the relationship between use of delivered energy
and greenhouse gas emissions. We have commissioned research which
provides one such methodology, which we believe provides the basis
for developing a reliable tool for measuring the contribution
of energy efficiency to reductions in greenhouse gas emissions.
We draw it to the attention of Government.
The fuel mix
2.44. We have already noted that energy efficiency
is just part of the story so far as overall energy use and its
carbon impacts are concerned. Our approach to measurement embraces
two components: a figure for the gross amount of energy actually
used by consumers, and a "multiplier", which reflects
the carbon intensity of the total fuel mix at any given time.
Improvements in energy efficiency principally affect the first
of these components, delivered energy, and this is accordingly
the main focus of our report. However, the impact upon carbon
equivalent emissions remains the ultimate measure of energy efficiency.
2.45. If follows that any gains in energy efficiency
could be either nullified or enhanced, as the case may be, by
changes in the carbon intensity of the fuel mix. This could be
as a result of fuel switchingfor instance, from coal to
gas, or from fossil fuels to renewables or nuclear poweror
through changes in the efficiency with which existing fuels are
converted into useful power or heat.
2.46. The impact of such changes in the fuel
mix was vividly demonstrated by the announcement on 21 March of
the final figures for United Kingdom emissions in 2003. These
revealed an increase in overall greenhouse gas emissions, particularly
CO2, largely as a result of increased use of coal for
electricity generation, which more than offset improvements in
energy efficiency across the economy as a whole.
In fact United Kingdom CO2 emissions in 2003 were just
5.6 percent below the 1990 level, compared with a national target
for a 20 percent reduction by 2010.
2.47. The then Defra Minister, Lord Whitty, described
this rise in carbon emissions as a "blip", and "not
a long-run tendency", noting that the rise in emissions was
caused by a "change in electricity sourcing" rather
than a long-term rise in energy consumption (Q 716). Insofar as
this is true, the increased use of coal is simply a partial reversal
of the "dash for gas" in the 1990s, in itself a one-off
event which saw the contribution of coal and oil to the electricity
generation fuel mix fall from around three quarters to around
a thirdand which, indeed, played a major part in the United
Kingdom's success in reducing greenhouse gas emissions to below
the levels set by the Kyoto Protocol.
The Minister's argument thus cuts both ways.
2.48. We have not addressed issues such as the
efficiency of large-scale power generation, though we have touched
on the role that more efficient combined heat and power plants
might play in achieving the Government's objectives. Nor have
we addressed issues such as the extraction and transportation
of primary fuel, or the losses from transmission and distribution
systems. Looking forward, nuclear power is currently scheduled
to be phased out by around 2025, despite media speculation over
its future. There remain doubts over the likely contribution that
renewable energy sources will make to electricity generation,
and over the extent to which carbon sequestration will be implemented
to reduce emissions from fossil-based electricity generation.
Major technological innovations that would offer large-scale,
cheap, environmentally benign electricity (such as nuclear fusion)
remain in all probability some decades ahead, even on the most
optimistic predictions. Therefore efforts to reduce emissions
cannot be relaxed, and the risk remains that changes in the carbon
intensity of the fuel mix will undermine any improvements that
can be achieved by means of end use energy efficiency.
2.49. We welcome that fact that the United
Kingdom remains on track to meet its Kyoto obligations. However,
as the emissions data for 2003 show, there is no cause for complacency
or self-congratulationthe Government have themselves conceded
that the domestic targets contained in the Energy White Paper
are unlikely now to be met. In fact the United Kingdom had already
met its Kyoto obligations before the end of the 1990s, largely
for structural reasons and because of changes in the fuel mix,
whereas since 1999 carbon dioxide emissions have risen.
2.50. Energy efficiency could contribute significantly
to future reductions in emissions, and in the remainder of this
report we analyse ways in which this contribution can be maximised.
However, we believe that in the long term there is no prospect
of the Government's climate change objectives being met unless
there are also innovations in generating technology, fundamentally
changing the carbon intensity of the primary fuel mix. We urge
the Government to face up to this issue.
8 The words quoted are from paragraph 1.19. Back
House of Lords Select Committee on the European Communities, The
Rational Use of Energy in Industry, 8th Report, Session 1982-83
(HL Paper 83), pp viii-ix. Back
House of Lords Select Committee on the European Communities, Energy
and the Environment, 13th Report, Session 1990-91 (HL Paper
62-I), p 23. Back
This evidence is drawn together in the Third Assessment Report
by the Intergovernmental Panel on Climate Change, published in
2001 (http://www.ipcc.ch). For the Prime Minister's speech see
The Warm Front programme is dedicated to improving housing standards
and reducing fuel poverty; the Energy Efficiency Commitment (EEC)
is a commitment taken on by energy suppliers to install energy
efficiency measures in domestic properties with a view to reducing
carbon emissions. Back
The base year figure (which in fact incorporates 1990 emissions
of CO2, CH4 and N2O, and 1995
emissions of HFCs, PFCs and SF6) is currently calculated
to be 209.7 MtC. The United Kingdom is obliged to cut this to
183.5 MtC, averaged over the five years of the commitment period. Back
A cut of 60 percent, if replicated by other developed countries,
would allow stabilisation of carbon dioxide concentrations in
the atmosphere at no more than 550 parts per million, the target
adopted by the RCEP. Back
Climate Change: The UK Programme, November 2000 (Cm 4913),
p 53. Back
Ibid., p 125. Back
See White Paper, pp 26, 32-33. Back
Action Plan, p 10. Back
Review of the UK Climate Change Programme, p 23. Another layer
of confusion is added by the fact that the "baseline"
figure for 1990, which in 2000 was set at 211.7 MtC, is now set
at 209.7 MtC. Back
Dr Sinclair's paper is printed in Appendix 4. Back
1 kWh = 3,600,000 joules, or 3.6 MJ. Back
The Government state on p 63 of the Review of the UK Climate
Change Programme that household CO2 emissions have
fallen by around 3 percent since 1990; see also the graphs and
tables of CO2 and greenhouse gas emissions (pp 21-27).
See the Statistical Release by Defra, 21 March 2005: www.defra.gov.uk/news/2005/050321a.htm.
See Dr Sinclair's paper, Table 4, which reveals a fall in the
carbon intensity of the electricity generating mix of around 25
percent from 1990-1995, corresponding to an absolute drop in emissions
of almost 20 MtC, some two thirds of the absolute total fall in
emissions since 1990. Back